Pick the more price sensitive good

Exercise and reference answers

Questions

1. A

   Housing

   B

   Restaurant meals

   Higher value

   Restaurant meals

2. A

   Beer

   B

   Gasoline

   Higher value

   Beer

3. A

   Computer

   B

   New vehicle

   Higher value

   Computer

4. A

   Electricity

   B

   Soft drinks

   Higher value

   Soft drinks

5. A

   Cable TV, premium

   B

   Cable TV, basic urban

   Higher value

   Cable TV, premium

6. A

   Taxi cabs

   B

   Chicken

   Higher value

   Chicken

Instructions

Tap whichever good of the two has the higher elasticity of demand.

Explanation